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Bua Briefs 146

2010 FIFA World Cup™ Football Fridays

The Presidency, under the leadership of the Deputy President of South Africa and Chairperson of the 2010 Inter-Ministerial Committee, Mr Kgalema Motlanthe, will on 30 October 2009 launch the Football Fridays initiative for government in support of the2010 National Communication Partnership’s (NCP) Fly the Flag for Football Campaign. This will add impetus to the private-sector organisations that have started to implement this campaign.South Africa is honoured to be the host of the first African FIFA World Cup.

We are working closely with the 2010 FIFA World Cup™ Organising Committee of South Africa to meet our guarantees for the World Cup.

Our stadiums and major transport infrastructure projects are all within set completion timeframes, with the Nelson Mandela Bay Stadium, one of the six new stadiums already complete; and Phase One of the Bus Rapid Transport System in Johannesburg as well as three of five new 2010 tourism information centres being operational. Between 2006 and 2010, government will be spending approximately R600 billion on infrastructure development. About 5% of this is allocated to legacy-related projects that will complement the hosting of a successful World Cup. National government is contributing over R28 billion to 2010 World Cup-related projects.

The final 2010 FIFA World Cup™ draw on 4 December will reinforce our state of readiness to host this tournament and welcome the world.

Let us all take pride and patriotism in our domestic mobilisation campaigns.

Football Fridays showcase our positive anticipation of the 2010 FIFA World CupTM.

An initiative of the Southern Sun hotel group, Football Fridays has now become an official, national celebration.

We must show support for our national team, Bafana Bafana, by wearing a football supporter kit every Friday until the 2010 World Cup and attend matches across the country.

We will fly the flag for the game of football, display our national symbols, build a cohesive nation and learn our national anthem.

The 2010 NCP will sustain the Fly the Flag for Football Campaign for domestic mobilisation.

All South Africans – and everyone living in our country – are invited to fly the flag, learn the national anthem and embrace these symbols with pride.

Let us celebrate our unique “South African-ness” through diverse cultural activities, including the diski dance and proudly South African music.

Working with various sectors of society to intensify Football Fridays, let us display the spirit of a winning nation.

Let us all be part of Team South Africa, contribute towards a memorable World Cup and display the spirit of ubuntu to the world. Let us become good hosts for the world to revisit our shores even long after the World Cup event.

Highlights

2010 World Cup

2010 World Cup stadiums
The South African construction group, Grinaker-LTA, celebrated the roof wetting of the 89 000-seat Soccer City Stadium, which was completed on schedule. The stadium had contributed R512 million worth of procurement investments to Black Economic Empowerment companies and created 4 700 job opportunities.

Energy

Green projects in South Africa and Tunisia receive funding
Boosting energy efficiency in South Africa and promoting environmentally-friendly production in Tunisia are the focus of two new United Nations (UN) projects signed recently. The Swiss Government will help fund the UN Industrial Development Organisation’s projects under an accord signed in Bern.

Their readers voted Cape Town their second favourite overseas city, five places up from last year. Bulungula Lodge came second in the Ethical Travel category.

Human Settlements

Alexandra Renewal Project (ARP) scoops top UN awardUN Habitat recently awarded the Habitat Scroll of Honour to the ARP to coincide with World Habitat Day. The UN Habitat said in a statement it was their unanimous opinion that the ARP should receive the award this year for its outstanding efforts in upgrading the housing, social and physical infrastructure of the Alexandra neighbourhood and improving the living conditions of its residents.

Government is confident that Nersa’s adjudication of the Eskom’s tariff application will be transparent and objective.

Eskom’s application to increase electricity tariffs is guided by the rules of Nersa and the Electricity Pricing Policy. This policy ensures proper public consultation and transparency on electricity pricing.

Nersa is compelled to act within the policy and legislative framework that has been established by government and consider the low-income groups in the decision- making process.

How is the 2009/10 electricity tariff determined?Eskom submitted its application to Nersa on 30 September 2009 to increase revenue for the period April 2010 to March 2013. Nersa, after consultation with industry stakeholders and the public, will approve the revenue requirements and from this a price increase is calculated and applied to all rates.

What is the expected increase in the price of electricity?
Eskom’s projections show that the revenue increase applied for translates into an electricity price increase of 45% per annum for the three-year period.

How does the proposed increased translate into rands and cents?
Based on Eskom’s current asset base, an electricity price in the range 80c/kilowatt/hour (kWh) to 88c/kWh in real terms will allow Eskom to meet its expansion obligations. Even at this level, Eskom’s price remains competitive when compared to international electricity prices.

What is the current electricity price tariff?
The current average price of electricity is approximately 33c/kWh, which is insufficient to recover all the utility’s costs, build reserves to sustain its current asset base or support Eskom’s capital expansion programme.

What is the average household’s electricity consumption?
The average low-income consumer’s consumption is 80KWh.

When will the new electricity price increases take place?
The outcome of the process will be announced by Nersa on 24 February 2010. The new electricity price changes will be implemented from 1 April 2010, except for municipal customers who will have their price changes effective from 1 July 2010.

Why does the price of electricity have to increase?
The electricity tariffs form part of the funding model for providing the necessary electricity-generation infrastructure. The increase in energy costs reflects the increase in generation costs i.e. the costs of power stations come through in the energy rates. The other funding options consist of a combination of borrowings and capital support from the South African Government.

What are the critical factors upon which Eskom is basing its application for tariffs increases?
South Africa’s electricity reserve margin has sharply declined to 8% in recent years, which is below the international norm of 15%, resulting in an energy supply shortage.

Why is South Africa experiencing a shortage of electricity?
Compared to 1994, about 4,6 million more people now have access to electricity. The World Energy Council Report praises South Africa’s progress in extending electricity to those who never had it before. Electrification of South Africa’s urban areas has risen from 36% in 1994 to 90% at present. The number of rural households with electricity has risen from 12% in 1994 to 52% in 2005.

Why is it necessary for Eskom to apply for another electricity price increase?
Eskom’s tariffs are designed to support energy efficiency with the utility using energy rates that are time-of-day and seasonally differentiated.

The tariffs support capacity efficiency through cost-reflective network charges. These charges ensure that networks are used in an optimal way as customers pay for what they use and for what they reserve on the network for their own requirements.

How have the price increases in recent years helped Eskom’s Build Programme?
Since its capital expenditure programme started in 2005, Eskom has already expanded its capacity by an additional 4453.5 megawatt (MW). Over the next three years, significant generation-capacity improvements will be made through the return to service of the Grootvlei, Camden and Komati power stations. This momentum will continue and the plan is to deliver an additional 16 304 MW in power-station capacity by 2017.

What steps are government putting in place to protect vulnerable consumers?
Government provides protection to the poorest consumers through a free basic electricity allowance. Qualifying customers are eligible for 50kWh of free electricity every month. The tariff increases applied to the poorest consumers are far below the average tariff. The 2009 Nersa price increase included a limit of 15% for poor Eskom and municipal customers.

How does the price of electricity compare to other parts of the world?
Eskom’s average selling price of electricity, one of the lowest in the world, continues to remain an important feature of the electricity industry in South Africa. This is partially as a result of the use of low-grade coal and present pricing policy and practices.

How has government supported Eskom’s capital expenditure programme?
Government support in implementing the investment programme is a R60-billion support package in the form of a 30-year subordinated loan. It will underwrite Eskom debt of R176 billion over the next five years.

Will the price increase affect economic growth?
Investment in electricity generation infrastructure is a necessary precondition for sustained economic growth and development, which leads to employment, increased family income and better living conditions for all. Economic growth and new sector investments can only proceed under conditions in which the future supply of electricity is secure.

Which customers could expect to pay more/less?
The impact on individual customers is dependent on the customers’ actual load profile. On average, customers will pay more if they have a higher load factor, have higher peak energy usage and where energy costs make a larger portion of their bill.

Can consumers do something to save electricity?

Government calls on all businesses, workers, citizens, public servants and communities to be part of the solution to save electricity and reduce the impact of climate change.

South Africa remains one of the highest per capita emitters of the greenhouse gas, CO², in the world. Using electricity wisely will also help to reduce carbon emission.

Everyone must continue to use energy efficiently and take all measures in their homes, at work and in schools to become a more energy-efficient nation.

Adjusting your geyser to 55 degrees, switching off all unused plugs or switching to liquefied petroleum gas should help save electricity, which will in turn minimise the impact of the tariff increase through saving on electricity bills.